Investors are increasingly concerned about inflation, which peaked at a 15-year high above 25 percent in October as Turkey weathered a currency crisis that wiped nearly 30 percent off the value of the lira last year.

The central bank has left its policy rate at 24 percent since September, when it hiked 6.25 percentage points. In an attempt to stabilise the Turkish lira amid a selloff in recent weeks, the central bank turned to a series of back-door tightening measures including keeping repo auctions closed.

Year-on-year, consumer prices had been forecast to rise 19.57 percent in a Reuters poll of 16 economists, compared with 19.67 percent in February.

A decline in inflation since October stalled in January. On a monthly basis, prices rose slightly in March.

Even as inflation is expected to continue on a downward trend, monetary policy will depend on how the lira performs, said Jason Tuvey, senior emerging markets economist at Capital Economics.

“Geopolitical tensions with the United States are building again and the direction of policymaking remains a key concern for investors,” he said.

“This is likely to limit the scope for monetary easing which might otherwise be warranted by a further decline in inflation.”

Tuvey added that if currently strong oil prices ease this year as expected, it will contribute to the decline in inflation.

The producer price index rose 1.58 percent month-on-month in March for an annual rise of 29.64 percent.

Inflation had declined slightly in February thanks to a dip in food prices that were driven lower by government-run stalls selling cheaper fruit and vegetables.

Last year’s sell-off was sparked by concerns over the independence of the central bank and exacerbated by worsening ties with Washington.

The currency has suffered due to similar market concerns in recent weeks as ties with Washington were strained again over Turkey’s push to purchase Russian missile defence systems and the central bank used unorthodox methods to tighten policy.

The lira stood at 5.6249 at 0810 GMT on Wednesday, weakening nearly half a percent from Tuesday’s close of 5.6000, mostly due to the uncertain outcome of local elections in Istanbul, where the initial count showed President Tayyip Erdogan’s AK Party losing with a narrow margin. (Reporting by Behiye Selin Taner; Writing by Daren Butler and Ali Kucukgocmen; Editing by Jonathan Spicer and Dominic Evans)